The upside of the looming resource crisis
January 5, 2017
We’ve all heard the expression “Waste not, want not,” but most of us don’t live by this rule — or even have the option. Everything from the buildings and cities we live in to the food we eat is the product of a highly wasteful economic system that can be characterized as linear: take, make, dispose. By harvesting virgin materials to create products that typically end up in landfills not long after, this system has enabled high standards of living in many parts of the world, but has also created tremendous environmental, financial, and social challenges.
But there’s a silver lining. In an era of bitter political polarization, the proponents of a framework called the circular economy say that “waste not, want not” thinking can help environmentalists, businesspeople, and community advocates find common ground. Developing new business models and technological solutions to capture more value from a broad range of resources presents an opportunity to increase prosperity in a truly sustainable manner, they argue.
Ideas about the circular economy are spreading quickly, particularly in Europe. A widely shared 2015 report from the Ellen MacArthur Foundation helped popularize the concept. In January 2016, it was a core focus of the World Economic Forum in Davos.
Governments at every level have begun to grapple with what these ideas could mean for their constituents. In 2015, the European Commission adopted a multifaceted circular economy plan. Sweden recently halved its tax on repair services, encouraging residents to fix broken washing machines, bikes, clothes, and other products instead of buying new ones. London plans to publish its circular economy plan in early 2017.
The private sector has also taken notice. Mitsubishi and Philips have begun to offer some of their clients elevators and lighting as lifetime services rather than one-time-purchase products — another means of encouraging repair over replacement. Arup recently unveiled the Circular Building, a mock house that uses materials designed for deconstruction, with suppliers agreeing to take them back at the end of the building’s lifespan.
The thinking behind the Circular Building points to a critical aspect of the circular economy: its multidimensional nature. Crucially, according to Carol Lemmens, Arup’s global management consulting leader, the design process emphasized people and profit as well as the environment. “It may look as if we approached [the Circular Building] only as a materials issue or a new way of cradle-to-cradle, but the project also specifically meant to develop new business models for the whole supply chain,” he said.
Similar ideas may soon be realized on a much grander scale with a massive London redevelopment project called Old Oak and Park Royal. Two agencies leading the circular economy push in the UK capital, the Greater London Authority and the London Waste and Recycling Board, commissioned Arup to carry out a circular economy scoping study for a vast tract of land that will one day host up to 25,500 homes and 65,000 jobs. With this initiative, London’s government is betting that finding new and better ways to capture the value of resources can create good, stable jobs for its citizens.
“It’s not only about sustainability,” Lemmens said. “It’s also about better business and having positive social impact.”
Imagination and collaboration
Making the circular economy a reality on a global scale will require governments, businesses, and ordinary people alike to rethink their activities — and, in some cases, radically alter them. Individuals and organizations at all levels and in all sectors of society will need to find new ways to work together.
From the perspective of building design, projects would start with a series of questions that aren’t typically asked today. How can we develop for deconstruction, for example, and manufacture without creating negative externalities? Can a building serve as an off-grid energy plant? Could companies that supply materials eventually take them back? Project stakeholders from developers and contractors to end users would need to come together to agree on better solutions.
The (single) bottom line
One of the keys to making this kind of collaboration a reality is a convincing appeal to financial self-interest. “We have to prove to people that the circular economy is good for business, not just another expense,” said Jim Quiter, Arup’s management consulting business leader in the Americas.
The Ellen MacArthur Foundation, together with partners like McKinsey, SYSTEMIQ, IDEO, and Arup, has been working to make this case. On the macro level, the foundation estimates that transitioning away from a linear model could increase European GDP by 27% by 2050, compared to 15% in the business-as-usual model. On the building scale, it discusses the tremendous potential of strategies like passive house design, which can cut heating and cooling costs by up to 90%.
Inevitability and profitability
Going circular isn’t just about increasing wealth — it may soon be our only option. “It’s not always appreciated by businesses to point out that this might be a necessity,” said Lemmens, but “the world’s resources are being overutilized much faster than nature produces some things.”
Some materials we rely on for industrial processes could run out within the next decade. By minimizing the use of virgin materials and natural resources, the circular economy could provide an economically viable solution to this impending crisis.
“Finding a way to reuse and repurpose things instead of having them go to waste — in the long run, that has to be good for business,” Quiter said. “The people and companies that get there first are the people and companies that will disrupt industry and reap the most benefits.”
Meanwhile, Lemmens believes, those who lag behind will themselves be disrupted.